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Brink’s getting back into home security?

Company’s CEO says it is considering re-entry
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02/06/2014

RICHMOND, Va.—Brink’s got out of the home security market in 2008 but may be reentering that market, the company’s CEO said recently.

ADT releases Q1 results—and stock price drops

But Imperial Capital maintains ‘outperform’ rating on ADT, saying it expects ‘positive catalysts’ from the company in 2014
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01/30/2014

BOCA RATON, Fla.—Although The ADT Corp. reported Jan. 30 that ADT Pulse take rates and recurring revenue were up in its latest quarter, it also said net income decreased 27 percent in that period—and its share price tumbled.

Digital Life, Imperial Capital join PPVAR

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Wednesday, January 15, 2014

Several organizations recently joined PPVAR’s growing membership roster, but two of the new additions are particularly striking. Digital Life, a home management platform from AT&T, is now on board, according to Keith Jentoft, an industry liaison for PPVAR. This comes about seven months after Digital Life earned CSAA Five Diamond certification.

Investment bank Imperial Capital also joined the organization. This is doubtless an interesting development as well, with Imperial being the organization's first member from the private investment side. In a certain sense, an investment bank showing interest in video verified monitoring seems unsurprising, given signs of the technology's more mainstream direction, plus the technology’s ability to drive higher average revenue returns per customer. Additionally, when a private investment bank allies itself with a best-practices organization, it suggests their interest in the value proposition runs fairly deep.

The group also added The Illinois Alarm Association and the Michigan Association of Police Chiefs as members—both organizations the likes of which we've become more accustomed to seeing engage with PPVAR, an organization focused on pooling knowledge from members in both public and private sectors.

As PPVAR forges ahead toward its goal of written standards for video verification, I’ll be keen to see what kind of bearings its new members have on the organization’s direction. Will the addition of Digital Life compel other cablecos and telecoms to join? And with respect to Imperial Capital, I’m curious to see what kind of role they play in promoting PPVAR’s cause. Will their membership generate further interest in video verification from other private investment groups?

The organization is convening in the coming days, Jentoft said. After they do, I hope to get a clearer picture of where the organization is at this stage of the process.

ADT working to ‘stabilize’ dealer program

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Wednesday, December 11, 2013

ADT officials weren’t available for comment when I wrote recently about an industry’s analyst’s report on how ADT had “culled” about 100 low-performing companies in order to improve its dealer program over the past year.

But in an ADT investor call last Friday, Alan Ferber, president of ADT’s residential business unit, confirmed much of what the analyst, Jeff Kessler, Imperial Capital’s managing director of institutional research, had said. Ferber also outlined ways ADT is working to “stabilize” that channel.

According to Seeking Alpha, which published a transcript of the Dec. 6 investor call, Ferber said:

So in 2013, we began to optimize our dealer channel to focus more resources on those that are [indiscernible] to evolving with ADT's overall direction and the trend towards automation. And while we're eliminating about 100 dealers, which obviously impacted overall net adds, our focus on the right dealers has resulted in the quality of the customers that come through that channel to remain high and actually have been improving. ARPU is about 10% above our average ARPU and growing about 5% over the past year and the creation multiple has actually come down even though there's been an increase in SAC. But we do remain focused on strengthening and continue to optimize this dealer channel to drive growth over time.

… In addition, channel growth was impacted by some changes among our largest dealers. We purchased 1, 1 had some cash flow issues that impacted their ability to increase adds and 1 left ADT for a competitive program. I'm very pleased, however, to report that, that dealer has now returned to the ADT family once he experienced the negative impact on his business of not having the powerful ADT brand behind him. So it's reconfirmed our dealer value proposition with that dealer and with many other dealers as well.

But more importantly, we're taking a number of actions to stabilize this channel. We are investing in enhanced funding to help drive further Pulse adoption, particularly higher end Pulse, where that higher level of automation has a very significant retention benefit as well. And increased funding will also enable some incremental sales and marketing activities by our dealers and also the recruitment of new high-quality dealers that are positioned to further drive automation.

… We're also investing in staffing and support to ensure success. We've added resources to provide better support for planning and performance management, and we've enhanced training and other tools to get new and existing dealers more productive, particularly with our new services. And while we certainly expect some noise in the next couple of quarters, we do believe these actions are establishing a very strong foundation for growth over time.

 

 

Growth prospects positive for IR spinoff Allegion

As a stand-alone entity, Allegion will have free cash flow of $150 to $200m solely for security
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12/03/2013

DUBLIN, Ireland—Ingersoll Rand spinoff company, Allegion, is now an independent, pure play security company, “a $2 billion startup” with potential for continued growth in North America and big growth outside of North America, according to Allegion executives Dave Petratis and Tim Eckersley, as well as security analyst Jeff Kessler, who all spoke to Security Systems News.

ADT culls ‘weaker players' from its dealer program

Imperial Capital’s Kessler predicts ADT dealer-based Pulse take rates should increase
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11/26/2013

NEW YORK—ADT’s dealer program has been one of the company’s “soft spots” for years but now is turning around after the company “culled” more than 100 lower-performing dealers over the past year or so, according to an industry analyst.

Kastle Systems acquires monitoring station, Mutual Central Alarm Services from ADT

Deal adds 4,000 customer sites, Stat-Land Security Systems and UL-listed Five Diamond Certified monitoring station
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11/22/2013

FALLS CHURCH, Va.—Kastle Systems International added 4,000 customer sites and a new, highly specialized UL-listed Five Diamond central station in New York City with the Nov. 21 acquisition of Mutual Central Alarm Services and Stat-Land Security Systems from ADT.

Kessler and DeMarco: Professional monitoring, strategy bode well for DIRECTV/Lifeshield deal

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Wednesday, June 5, 2013

I had a chance to speak to Jeff Kessler, research analyst for Imperial Capital, and ESX chairman George DeMarco about the satellite television giant DIRECTV getting into security with the purchase of LifeShield.

Below is a summary of those discussion:

This deal is different from the string of cable companies and telecoms that have jumped into the fray over the past couple of years, Kessler said, for a couple of reasons.

First, DIY is built into the DNA of both DIRECTV and LifeSheild, Kessler said. “They understand each others’ way of working,” and that will make the combination more successful.

Second, LifeSheild, and now, DIRECTV, is using CMS, Protection 1’s professional monitoring arm to monitor security customers.

With the exception of AT&T, which is building two monitoring centers, the other cable and telecom players are not using professional monitoring centers.

“This allows DIRECTV to show off its feathers in front of other cable and telecom players,” Kessler said. Those companies are using “generic customer service organizations to do their initial [monitoring] service, [but DIRECTV has a acquired a company] that uses the largest independent monitoring company in the country with five branches.”

He pointed out that CMS has extremely experienced people answering phones who know about intrusion and life safety, including carbon monoxide. The company also has a group of people who are specially trained in health care for calls related to personal emergency response.

All of this is important, he said, because it will improve the customer experience for DIRECTV’s security customers. Going with a professional monitoring company will help convince customers that they can trust DIRECTV as their security provider because customers believe that the “police will be there in five minutes, or a health specialist will stay on the phone for 35 minutes with a customer,” he said.

In general, the public’s perception about cable companies’ service is not good. This is a hurdle for cable companies who enter the security industry. By partnering with CMS that has “proficiency and experience dealing with customer emergencies, whether it’s security or health,[DIRECTV] is in a better position to succeed,” Kessler said.

Kessler said there will likely more deals like this where an outsider like a satellite or cable company will buy a home security provider. In addition, Kessler expect to see more “partnerships as telcos and cable operators realize the value in having a high-quality partner on the service end of the business.

George DeMarco, chairman of ESX, and former owner of Greater Alarm said DIRECTV’s strategy is pretty straightforward.

“DIRECTV has 20 million customers. If the current market penetration for electronic security systems is approximately 20-25 percent, then their customer database is a gold mine.”

DeMarco said it’s all about finding new, complementary, recurring revenue streams that “boost their ability to attract a greater share of the customer’s wallet. Offering security and home management systems with interactive service capabilities, especially video, gives DIRECTV an opportunity to overlay additional home services for customers, while growing top-line revenues and increasing bottom -line profits.  
 
“With the advancements in product technologies, cloud-based services, and mobile devices, Multiple System Operators (MSO) and telecoms have been eyeing the electronic security industry of late. That said, I believe DIRECTV and other MSOs are looking for ways to augment their current offerings.” 

DeMarco said the those industries’ subscribers are willing to “cut the cord” from content packages because of the impact of Hulu, Netflix, and Amazon’s Prime Service. “In other words, MSOs can increase new phone and broadband subscribers while losing paid TV subscribers. Consumers have more choices today for content and delivery of broadband services. As a result, MSOs are exploring other sources of revenue for growth opportunities and the electronic security industry seems to be the likely candidate.”

 

ADT shares upgraded to equal weight

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05/09/2013

BOCA RATON, Fla.—Morgan Stanley this week upgraded shares of The ADT Corp. from an underweight to an equal weight rating in a report sent recently to investors, according to multiple reports. The firm currently has a $47.00 price target on the stock.

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